VIS Credit Rating Company Limited (VIS) has reaffirmed the entity ratings of International Industries Limited (IIL) at ‘AA-/A-1’. The ‘AA-‘ rating reflects high credit quality with strong protection factors, while the ‘A-1’ short-term rating indicates a strong likelihood of timely repayment and excellent liquidity. The outlook remains ‘Stable’.
IIL, a key player in steel and polymer pipes, operates two facilities in Karachi and one in Sheikhupura. Its subsidiaries, IIL Americas Inc. and IIL Australia Pty. Inc., support market diversification, while IIL Construction Solutions (Pvt.) Ltd. provides local engineering services. IIL is part of the Amir S. Chinoy Group, a prominent industrial player in Pakistan.
The ratings consider IIL’s strong market position but acknowledge the high business risk in the steel sector, closely tied to construction and cement industries, and vulnerable to economic cycles. Profitability is pressured by commodity price exposure, energy costs, competition, and exchange rate volatility due to reliance on imported raw materials. Steel demand has been impacted by weak construction, high inflation, import restrictions, and political uncertainty.
Despite lower sales volumes, revenue rose due to higher average prices, supported by working capital management, margin optimization, and dividends from subsidiaries. Liquidity remains sound, though extended receivable cycles pose challenges. Profitability, though lower, was bolstered by income from subsidiaries, supporting debt servicing. Going forward, ratings will depend on IIL’s ability to maintain its financial risk profile amid external challenges. The group’s investments in new initiatives are expected to drive future demand, though managing energy costs and working capital will remain critical.
